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September 28, 2015

Maintaining Your 401(k) Plan Accounting Records

The complexity of an employee benefit plan can vary in many ways, depending on the rules of the plan itself and the plans investments, etc.  The accuracy of a plan is vital to ensure proper management and financial reporting. Here are some rules to help guide you in the maintenance of your plan.

401(k) PLAN PARTICIPANT RECORDS 

Plan participant records are payroll records that are generally found in personnel files. These records provide information to plan administrators that enable them to decide if a participant is eligible to participate and receive benefits of the 401(k)plan. A participant’s eligibility as well as benefits are based on service, earning, age, etc.

PARTICIPANT ACCOUNT INFORMATION

A participant’s account balances should agree with the plan’s net assets and provide a participant statement to confirm account balances.

Per ERISA rules and regulations, each participant’s share of the net assets will be tracked and maintained by the plan administrator.

ASSETS AND INVESTMENT INFORMATION

To be in compliance with ERISA rules and regulations, detailed reporting is required for all investment assets. These assets may be maintained by the plan administrator or possibly outsourced to a third-party administrator. This includes assets such as:

  • Investment assets acquired and/or disposed of in the plan year
  • Loans
  • Leases or fixed income obligations in default or said to be uncollectible
  • Non-exempt transactions as well as any 5% reportable transactions

401(k) PARTICIPANT CONTRIBUTIONS

All 401(k) plan contributions must be recorded.

This will ensure that contributions to the plan are not delinquent. These records may be kept with the participants payroll records.

DISTRIBUTION

ALL distribution reports for the plan participants should be preserved. These reports may include things such as distribution or loan requests, lump sum distributions with withheld taxes, etc. The plan administrator will usually have summaries of these transactions.

ADMINISTRATIVE EXPENSES

These are expenses charged by the plan administrator of the assets that can be verified by invoices, contracts, etc. 

Being the administrator of an employee benefit plan can be pretty complex. Some businesses find it simpler to hire a third party administrator to maintain and audit their plan so that it is in compliance with ERISA.

DO YOU NEED A THIRD PARTY ADMINISTRATOR FOR YOUR 401(k) PLAN?

Hiring a CPA firm that specializes in 401(k) auditing will make a difference in how smoothly your audit goes. Utilizing modern technology, it is possible to assist you entirely “off-site”, and with little or no distraction to your daily office routine. Anders CPAs + Advisors also offers flat-fee pricing for 401(k) audits so there are no surprises when you receive your bill.

To find out how we can assist your business schedule a free 401(k) audit consultation below or contact the team at (314)-886-7913 to talk about your specific 401(k) audit needs.

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